Head-To-Head Survey: Ferguson (NYSE:FERG) vs. W.W. Grainger (NYSE:GWW)

W.W. Grainger (NYSE:GWW) and Ferguson (NYSE:FERG) are both large-cap industrials companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.

Profitability

This table compares W.W. Grainger and Ferguson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
W.W. Grainger	9.92%	48.73%	22.40%
Ferguson	6.82%	37.24%	12.31%

Volatility and Risk

W.W. Grainger has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, Ferguson has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for W.W. Grainger and Ferguson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
W.W. Grainger	1	7	2	0	2.10
Ferguson	0	5	10	2	2.82

W.W. Grainger presently has a consensus target price of $1,286.62, indicating a potential upside of 0.32%. Ferguson has a consensus target price of $285.57, indicating a potential upside of 28.20%. Given Ferguson’s stronger consensus rating and higher possible upside, analysts plainly believe Ferguson is more favorable than W.W. Grainger.

Insider & Institutional Ownership

80.7% of W.W. Grainger shares are owned by institutional investors. Comparatively, 82.0% of Ferguson shares are owned by institutional investors. 6.3% of W.W. Grainger shares are owned by company insiders. Comparatively, 0.2% of Ferguson shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

W.W. Grainger pays an annual dividend of $9.96 per share and has a dividend yield of 0.8%. Ferguson pays an annual dividend of $3.56 per share and has a dividend yield of 1.6%. W.W. Grainger pays out 25.4% of its earnings in the form of a dividend. Ferguson pays out 41.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. W.W. Grainger has increased its dividend for 55 consecutive years.

Valuation & Earnings

This table compares W.W. Grainger and Ferguson”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
W.W. Grainger	$17.94 billion	3.37	$1.71 billion	$39.22	32.70
Ferguson	$31.32 billion	1.38	$1.86 billion	$8.51	26.18

Ferguson has higher revenue and earnings than W.W. Grainger. Ferguson is trading at a lower price-to-earnings ratio than W.W. Grainger, indicating that it is currently the more affordable of the two stocks.

About W.W. Grainger

W.W. Grainger, Inc., together with its subsidiaries, distributes maintenance, repair, and operating products and services primarily in North America, Japan, the United Kingdom, and internationally. The company operates through two segments, High-Touch Solutions N.A. and Endless Assortment. The company provides safety, security, material handling and storage equipment, pumps and plumbing equipment, cleaning and maintenance, and metalworking and hand tools. It also offers technical support and inventory management services. The company serves smaller businesses to large corporations, government entities, and other institutions, as well as commercial, healthcare, and manufacturing industries through sales and service representatives, and electronic and ecommerce channels. W.W. Grainger, Inc. was founded in 1927 and is headquartered in Lake Forest, Illinois.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.